With their honour codes, elaborate tattoos and fearsome reputation, Russia's crime bosses have for decades enjoyed a mythical status.

The "Vory v Zakone", or Thieves in Law, have been an untouchable mobster elite, accumulating vast fortunes with little fear of retribution.

But a new Kremlin-sponsored bill, approved in its crucial second reading on Tuesday, is looking to put an end to their reigns.

"We must end this state within a state, and with it this romantic image that sometimes surrounds these 'godfathers' and presents them as heroes," said Otari Arshba, a lawmaker with the pro-Kremlin United Russia party and the main supporter of the bill amending Russia's criminal code.

Arshba, a Soviet-era KGB officer who worked organised crime cases, said the key change in the law will be a provision making "the simple fact of being in charge of a criminal organisation enough" to convict crime bosses.

The 'Thieves in Law' emerged in the Soviet-era gulags, controlling the criminal underworld in Stalin's prison camps.

They developed their own subculture and jargon, similar to Italy's Cosa Nostra or the Yakuza in Japan, and were both lionised and feared.

They flourished in the chaos that followed the 1991 collapse of the Soviet Union, building huge criminal empires and branching out across Europe, the Middle East and North America.

They came under pressure after Vladimir Putin took power in 1999 promising an end to the lawlessness of the previous decade.

But they continued to operate behind the scenes, protected by corruption but also by the law, which did not make heading a crime organisation illegal in itself.

By limiting their direct involvement in criminal acts, mob bosses were able to avoid prosecution.

Under their own code, they could not even deny being members of criminal groups, but there was nothing the police could do about it.

- 'Shock in criminal circles' -

The amendment, which is expected to sail through a final reading later this week, allows the prosecution of criminals if they admit to their status or are informed on by others, with punishments of up to 15 years in prison.

Experts say that after years of operating with impunity, the 'Thieves in Law' are reeling.

"The president's initiative has caused a shock in criminal circles. Some are already thinking of leaving the country," Viktoria Gefter, the editor of the Prime Crime website, told Lenta.ru.

"The underworld is asking questions," said Mikhail Orsky, a retired crime figure who has written two books about his gangster career.

Orsky, 58, has said that in the 1990s he managed a gang of 50 ex-athletes and Afghan war veterans who engaged in extortion of the taxi business.

Speaking to AFP at his country house outside Moscow, Orsky said he believed some 400 Russian crime bosses will not simply accept either leaving the country or "going like lambs to the slaughter".

"They will think of something," he said.

The honour code could be changed to allow them to deny criminal activity, he suggested.

The head of the Moscow police labour union, former investigator Mikhail Pashkin, said the amended law could even be used against some of the most powerful figures in Russia.

"Some Russian billionaires are ex-mafia chiefs, now they control important financial flows, companies, they buy lawmakers, judges and prosecutors," he said.

But some observers worry that the changes could be abused to go after legitimate businessmen or in commercial disputes.

"From now on, any businessman could go to jail as a 'criminal chief', with his business seized by competitors with the help of corrupt policemen," said Vladimir Zherebenkov, a prominent defence lawyer who counts several ex-mafia businessmen among his clients.